The starting bell has rung, and the race for more drivers is on. The year's first major pay increase for drivers has been announced by Schneider National, which says it will be more than double its 2004 increase. Other major truckload carriers told us privately even before the Schneider announcement that they also intended to raise driver pay scales by similar amounts. It's only a matter of time, and a short time at that, before every other truckload carrier responds in kind.
Why, after years of talking about the need to pay drivers more, are fleets actually turning those words into dollars? The answer is simple — they have to and they can.
Truckload carriers have to pay drivers more because it's the only growth path open to them at this point. There's freight to be carried and trucks to carry it if you just have enough drivers.
More importantly, that imbalance between freight demand and fleet capacity is likely to continue for some time. The economy's fundamental health guarantees a steady freight stream. High operational costs in the form of insurance and fuel will keep competition from new entrants to a minimum. And a raft of driver issues that include an aging work force, more restrictive CDL requirements and potentially less productive hours-of-service regulations all add up to empty seats in trucks not available to carry that freight.
Which leads to the second point — fleets are going to pay drivers more this year because they can. It's no secret that driver compensation has lagged behind general wage levels for over a decade. The problem was that truckload carriers faced overcapacity and had little leverage on freight rates, so they lacked the money to catch up. With the current tight freight market, that segment of trucking is finally able to put rate increases into place that give them the ability to address driver pay.
So Schneider can now pay drivers an average of $4,000 more per year, as well as add premiums for short hauls, detention and other non-driving work. By the time this issue leaves the printer, I fully expect many others will have already announced similar pay plans.
While money is at the core of the driver shortage, to Schneider's credit it realizes that it isn't the only issue. Along with the additional dollars, the fleet says it is addressing some of the quality-of-life complaints that keep longhaul truck driving from being a more attractive job. The company promises more predictable work schedules with more options to allow drivers to get home on a regular basis, and it cites its investments in new wireless communications and trailer tracking systems as the tools that will help it keep those promises.
Again, Schneider isn't alone. Other large truckload carriers have invested heavily in new information technology and even restructured their freight operations to accommodate more palatable work schedules for drivers.
For many years it was commonly accepted wisdom that if carriers could just find more money and more time at home for its drivers, the shortage would disappear. We're about to find out if there was any truth to that accepted wisdom.
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